While the subprime mortgage crisis triggered the Great Recession of 2008, the U.S. real estate market has largely recovered from that disaster, with some home prices actually appreciating above pre-collapse values. What real estate trends will be driving the market in 2020? According to online real estate company Zillow, it could be a mixed bag.
How Will the 2020 Economy Affect Real Estate Trends?
Over the last 10 years, the U.S. market has been riding the wave of unprecedented economic expansion. But when Zillow surveyed 100 real estate experts and economists about their predictions for 2020, almost half of them responded that a recession was likely, possibly starting as early as the first quarter.
Unlike the last recession, the housing market is not expected to be the catalyst. Concern this time is focused on monetary policy, specifically the Federal Reserve’s actions regarding interest rates. Higher interest rates would pump the brakes on rising home values, which would make houses more affordable, but raising rates too quickly could usher in an economic slowdown.
Outlook for 2020 Housing Market
In last year’s survey, geopolitical issues were the hot button topic expected to influence the economy. Now that monetary policy has surpassed those concerns, other points to watch include the trade war with China, a potential stock market correction and high inflation rates.
Terry Loebs, founder of Pulsenomics, the company that conducted the Zillow survey, expressed optimism about continued health of the housing market. According to Loebs, factors such as constrained supply, persistent demand and low unemployment will surpass rising interest rates when it comes to impact on real estate trends.